SHARETIPSINFO >> Articles Directory >>Do you have a Trading Plan? Plan out and invest in Indian stock market


If you are new to stock market investment and think that you can make a fortune by trading abrupt without a plan or strategy, you are making a huge mistake. Without a solid planning and methodical research you can make one or two successful trades, but if you want to earn a regular income out of stock market investment or grow your investment you must have a trading plan. In fact it should be the first step to your stock market investment. Having a trading plan is not only important for successful stock trading but it will also keep you focused during the bad times at the stock market.

But before you make a plan for stock market trading, you should know what to plan and how make the plan. Planning for stock market trading should be primarily based on your trading objective. That means your trading strategy should be made on the basis of what you want get from your stock market investment. The other aspects that you should also consider are the amount of money that you are able to invest and risk you are ready to take. On the basis of these criteria you have to select the type of stock that is most suitable for you to trade and also plan the method of trading that suits you the best.

For example if you are investing in the stock market with a little amount and want to make a regular profit from that investment, careful daily trading can get you what you want. Or if you want to earn some quick money and have quite some fund to invest, you can opt for derivative trading. But if you want to grow your investment and if you are ready to wait for considerable period of time you should invest for long term trading in the large cap and blue chip stocks, as these stocks appreciate in the long run and give great return with long term investment. These are the simple things that you need to plan before you actually start trading at the stock market and this is the preliminary step of your forming your trading plan.

The next step for your trading plan is the selection of stocks. Remember selecting the right stocks is the key for success at the stock market. For the selection of the stocks you have to do the fundamental analysis of the stocks and keep a close watch on the market. But as a trader you should always remember that you are not investing in the whole of the stocks market. Rather you will be investing in a few selected stocks. So it is better to select the stocks according to your choice and while doing that make sure you select stocks from different sectors. This will minimize your risk in case of downtrend in one particular sector. Once you have selected a few stocks, it is time for fundamental and technical analysis of the stocks as that will reveal the actual picture about the stocks.

Another important part of any trading plan is that, you should always plan for longer period of time. As the stock market goes through different phases at different times and trends of the market swing from bull to bear, a short time trading plan or strategy might not hold good for you as a trader. So when you are making your trading plan you need to take the current scenario of the market, study the pros and cons and then decide on your trading plan.  As short term trading plan will not let you have the time to make up your losses at the stock market and turn the loss making trades into profitable ones.

All said and done, you have to admit that you can not well at the stock market without a flawless trading plan. But then there is some amount of risk for any investment at the stock market even after so much of planning. But if you have strategic investment plan to fall back on you can be rest assured that you will be able to withstand the losses and make further profit. So, have faith in yourself, have a good trading plan and stick to that, come what may.


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